By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all

This week, the gold markets will be analysing the monetary policy statements from the Federal Reserve, the European Central Bank, and the Bank of Japan. Despite Powell’s assurances that there would be at least two more rate increases this year, there was a lot of optimism this week that the FED was almost finished with its tightening cycle. At the FOMC meeting next week, the FED is almost certain to raise its policy rate by 25 bps to between 5.25% and 5.50%, but I am growing more confident that this will be the peak.

This optimism was supported by June’s inflation data, which showed a sharp decline in U.S. inflation. Last month, the CPI increased by 3%, the slowest rate in more than two years. The slowest growth since 2021 was seen in the core CPI measure, which excludes volatile food and energy prices, which rose 4.8%. There will be a period of uncertainty and data dependence before the FED can signal that it has stopped raising rates. On Thursday, the ECB is also anticipated to increase interest rates by 25bps, with analysts closely observing Christine Lagarde’s remarks. The BOJ is anticipated to maintain stable rates and unaltered yield curve control during this time.

On the one hand, optimism surrounding the non-yielding Goldprice may be maintained by expectations that the FED and ECB will likely announce the end of the tightening cycle. This still leaves room for the FED and ECB to make a surprise hawkish move, which would try to scare the gold market.

Additionally, traders are anticipating the release of US second-quarter advance GDP data on Thursday and the June Personal Consumption Expenditures (PCE) index data on Friday. The impact of the US earnings reports on risk sentiment and, ultimately, the value of the US Dollar and Gold, will be closely watched by markets.

The global preliminary Manufacturing and Services PMIs are currently the main focus for new indications of a likely recession. Reports on the US and Eurozone PMIs will be notable and could support US Dollar bulls if the data underwhelms markets and sparks widespread risk aversion. Fears of a global recession may also help support the price of gold, the traditional safe haven.

For gold traders, recent price declines are likely to be viewed as a good opportunity to buy gold at a discount. Just above the $1950 level, where the upward-sloping 100-DMA aligns, is the crucial buying area. Gold has crossed the important resistance of $1950 and the next immediate resistance is at $1968 (~Rs 59400) & $2000 (~Rs 60400) and support is at $1930 (~ Rs 59000) & $1900 (~ Rs 58000). Similarly Silver has crossed the important resistance of $25 (~ Rs 75000) and the next level to watch for is $26 (~Rs 78000). It seems Silver could outperform Gold and cross-record high prices in India and touch the Rs 80000 level in the next few trading days.